Financial Consolidation for Non-profits with Intacct

In this article, modern financial consolidation solutions will take center stage, particularly for multi-location Non-profit organizations using Intacct to manage parent company finances.

There is a population of non-profit Intacct customers who are overseeing the financials of their organization with multiple locations or entities.  Consolidating organizational information from more than one location, sometimes with diverse currencies, can be tedious without a premier financial consolidation solution.  Data continues to grow in size and significance in terms of decision-making.  More executives than ever are shopping for the right tool to allow their business end users to aggregate data into a set of financial statements or for summarized operational reports.  This article will zoom in on features and functionalities for the non-profit Intacct user who performs consolidations for monthly financials or annual budgets for the parent organization.

Let’s start by more fully understanding consolidations.  Financial consolidations are when you combine all of your different locations’ transactional data to create a singular set of reports for a parent organization.  These statements consist of entity data and illustrate the parent organization’s overall health in a straightforward way.  For not-for-profits, financial consolidations usually do not include eliminations for inter-organization transactions between entities.  However, it is not unusual with adjustments that have to be performed manually without today’s consolidation tools, and sometimes, currency conversion with multiple money types.  You could be looking for a modern consolidation tool, but there are 2 common motivators for CFOs to shop for a solution.

Your finance team might be looking for an automated, modern consolidation solution for a number of reasons.  Some are hoping to move on from older tools that are just too simple to meet today’s business demands, like manual Excel spreadsheet aggregations.  Some are ready to upgrade from older applications that are too complicated for business end user management, like Cognos TM1 or Hyperion.

I recently had the chance to speak with an accountant at the #BI360Focus15 conference who uses Intacct, and she is responsible for overseeing the financials for the parent organization.  Because the organization operates internationally, she is routinely working with her team to convert currencies while meeting national and international standards, such as the International Financial Reporting Standards (IFRS) to Generally Accepted Accounting Principles adjustments (GAAP), typically referred to as IFRS to GAAP.  Some consolidation tools provide in-depth analytics with sub-ledgers and are positioned within a complete suite of Business Intelligence (BI) modules, fully integrated with other software like ad-hoc reportingbudgeting and forecastingdashboards, and BI data storage.  Let’s focus on financial consolidations for Intacct, especially as a non-profit organization, so you can know what you need when looking for the best consolidation software for your team.

I have written about different data integration options before, but you can elect to consolidate your data within Intacct with the built-in reporting function for real-time analytics, but you’ll have to rely on less flexible reporting design and less in-depth aggregation features that all accounting systems tend to offer, in addition to some potential sluggishness in regard to querying data, depending on the amount of data and how many users are querying simultaneously.  Most independent software vendor (ISV) consolidation tools allow you to choose to integrate your information at a higher performance from a BI data store, but you’ll then have to replicate your GL data from Intacct to a data warehouse or an online analytical processing (OLAP) cube.

Organizations with fewer subsidiary entities to aggregate, with easier or no currency conversion needed, and/or with no need to run significant, simultaneous data queries will probably find Intacct’s built-in consolidation functionality sufficient.  In addition, if you aren’t anticipating that other data sources will be needed for analytics, don’t have to perform advanced auto eliminations or other adjustments that Intacct cannot do, you could likely just depend on Intacct.  Alternatively, BI data stores typically do enhance the consolidation process by pulling GL data right from Intacct, so this option could be impactful for parent organizations who have more complicated needs.

Replicating your data from Intacct to a Cloud or on-premises reporting data warehouse or an OLAP cube can be configured for regular refreshes – or you can push your information over as needed. Intacct data will typically replicate via a pre-built integration connecting to the Intacct API interface that will then feed the cube or warehouse, and consolidations are performed at a higher power level because of the stability of a BI data store.  BI data stores aid organizations with more complicated adjustments and conversions, larger and/or simultaneous data queries, and/or with a significant amount of organizational data to aggregate.  You should consider which of today’s consolidation features and functionalities are necessary to manage your non-profit’s particular aggregations.

Let’s begin with inter-organizational eliminations, currency conversion, and consolidation adjustments.  From time to time, one entity might buy or transfer service or assets to/from another entity, which cancels out line item(s) for the parent organization.  Inter-organizational elimination functionality takes these transactions out of the P&L and balance sheet since you are re-allocating resources, which you can do with Intacct or a BI data store through selected software.  Some BI tools even provide customizable Excel input forms that you can utilize to manually eliminate or adjust inter-organizational transactions.  Currency conversion does exactly what it sounds like – converts more than one currency into a singular money type for the unified set of statements.  Consolidation adjustments enable accountants to meet domestic and global accounting rules, manage currencies, and/or temporarily fix incomplete subsidiary data, in addition to other functions.  These adjustments help out in the task of submitting consolidated financial statements for the organization as a whole.

Allocations, reconciliations, and modeling organizational changes are additional important functionalities that should come with modern financial consolidation solutions.  Some organizations choose to allocate specific investments or donations and grants to particular projects, departments, and/or entities.  Allocations can be done within Intacct, or you can design allocation processes of varying complexities with some BI data stores.  If you decide to go with a BI data store, most organizations like to have either the parent organization or entity personnel reconcile information to make sure everything is accurate, which can be done with Intacct, a BI data store, or BI front-end software.  Finally, some data sources allow you to model reorganizations by copying and altering all the organizational trees or hierarchies that you need.  You will definitely see the impact of changes on your portfolio with this function.

You have a lot to consider, especially with the complex nature of consolidations, on top of your regular non-profit financial to-do list.  Solver, Inc. is happy to answer questions and generally review BI360’s easy-to-use, Excel-powered consolidation tool for non-profit Intacct users with both real-time or data warehouse integrated analysis, comprehensive reporting and collaboration as a way to accelerate organizational performance management.

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